Limiting factor analysis Flashcards
1
Q
what is a shadow price
A
the increase in value which would be created by having available one additional unit of a limiting resource at the original cost
2
Q
when can contribution per unit of limiting factors not be used
A
more than one limiting factor exists
products rank differently for these resources
3
Q
definition of slack
A
slack occurs when maximum availability of a resource or other constraining factor is not used
4
Q
4 limitations of linear programmin
A
can be difficult to know what resources will be in short supply
mgmnt may not make product mix decisions that are profit maximising. they could have different objectives
linear relationship may not exist
linear programming is not suitable for analysing in detail
